KNF’s 2016 recommendations will increase the cost of claims
In 2016, the Financial Supervisory Authority (KNF) issued recommendations to insurance companies on the process for determining and paying compensation for bodily injury claims for MTPL insurance. Probably KNF has been monitoring the implementation of its recommendation since the start of 2017.
The recommendations clarify how to service personal injury claims and require that insurers clearly explain to policyholders how the amount of compensation was calculated. However, the recommendations do not define how much insurers should pay; this remains a matter for the insurer to determine.
In S&P’s view, these recommendations are likely to sustainably increase the cost of MTPL bodily injury claims for the entire market, but also improve the predictability of claims. Market specialists expect courts to examine the insurer’s procedures for calculating compensation when deciding if it was a fair offer, for example. They also expect to see more compensation claims being decided through mediation, and a move away from court involvement.
The first market estimates suggest that compensation across the market will rise by about PLN 300 million a year, but the real impact has yet to be seen. According to the report’s authors , the impact of the recommendations will vary across Polish insurers.
